MKT501 CASE MOD 4 Strategic Marketing Module 4 Case

Student Name
Strategic Marketing Module 4 Case
MKT501: Strategic Marketing
Professor’s Name
Date of Submission
Strategic Marketing Module 4 Case
The fast-casual and fresh Mexican food restaurant industry has grown in the US and a as more people eat out, there are choosing unique cuisines such as those that offer Mexican foods. The US restaurant industry has grown in the last few years, and performance is closely linked to the country's economic growth and changes in tastes and preferences. This is an evaluation of the restaurant industry, the industry markups and contribution margins as well as supporting prices and margins.
Industry
The food and restaurant industry players use different pricing strategies depending on the operations and their target market. In the cost plus markup pricing approach the price is determined by multiplying the item cost percentage by the markup and then adding the item cost. In the case of the expensive ingredients it would be more costly to use a high markup when compared to the cheap vegetables where even after using a high markup the food items are still affordable to the target market. Restaurants only serving niche market and small businesses tend to have limited Menu Offering such as fast- casual food items and drink items. On the other hand, there are those offering diversified product portfolio such as tacos, salads, sandwiches, hamburgers, desserts, ethnic cuisines as well as coffee and other beverages.
The contribution margin over an accounting period is calculated as the difference between the sales price and variable costs per unit this implies that it is the benefit to the business regardless of the fixed costs where the fixed costs are costs that do not vary with the volume of activities and operations. According to Damodaran (2019), the gross margin for the US restaurant/dining is 30.92% in 2019 and 12.11% is the net margin, while the Cost of goods sold (COGS) / sales is 69.08%. Based on the formula that the mark up= gross profit/ cost of sales, then the markup would be 30.92% / 69.08%= 44.8%.
Direct labor and direct materials are the major component of variable expenses and the cost of raw materials varies over, and this is especially for the flesh food products as supply depends on the season. Considering how the supply chain affects the total costs helps to manage the costs and make profits while considering the customers demand. Both direct labor costs and the cost of foods are controllable and the costs tend to fluctuate based on the seasonal demand in the restaurant industry. The risings labor costs in the restaurant industry are a concern and one of the challenges to creating Mexican dishes and cuisines is getting the supply of fresh ingredients to make authentic recipes.
The cost of goods sold depends on the different types of foods and drink items sold and includes the food inventory cost, the food and drink item opening and closing inventories vary with the seasons and affect the cost of goods sold at different times during the financial year. Thus, optimizing the menu will help to reduce the costs during low and high demand, and this is especial when there is high demand as there is maximization of profitability. Because of seasonal ...